Poland, Germany face off over LNG terminal

WARSAW, Poland, Sept. 1 (UPI) -- Germany and Poland have faced off over a Polish liquefied natural gas terminal to be built on the Baltic Sea coast.

Poland in July signed a deal with a consortium led by Italy's Saipem to build an LNG terminal at the port of Swinoujscie, next to the border with Germany. Construction was to start this month but Germany has called for a re-evaluation of the permits.

Berlin asked Poland to carry out an environmental assessment study under the Espoo agreement, a U.N. treaty that handles cross-border environmental concerns, Polish daily Dziennik Gazeta Prawna reports.

Polish Deputy Finance Minister Mikolaj Budzanowski said the demand could delay finalization of the terminal, envisioned for 2014, by two to three years.

"It would also invalidate the construction permit and the environmental decisions," he told Dziennik Gazeta Prawna.

Budzanowski added that Germany is opposed to EU financing of the terminal.

Poland is eager to finalize the terminal to become less dependent on Russian natural gas imports. Polish observers have speculated that Germany aims to delay the LNG terminal because it would compete with the Nord Stream pipeline under the Baltic Sea, designed to move Russian gas unilaterally to Germany.

The first of Nord Stream's twin pipelines is scheduled to start operating in 2011. Officials say Nord Stream will eventually deliver up to 55 billion cubic meters of gas per year to Europe -- enough for around 25 million households.

Russian President Dmitry Medvedev in April called the $10 billion project a "contribution to Europe's energy security." Poland was one of Nord Stream's harshest critics and is still opposed to the pipeline. Its construction was delayed by a lengthy and difficult permitting process that involved major environmental impact assessment studies.

The companies involved in Nord Stream -- Russia's Gazprom, Eon Ruhrgas and BASF/Wintershall from Germany, Gasunie from the Netherlands and GDF Suez from France -- aim to sell Russian gas to Poland, Dziennik Gazeta Prawna writes, adding that the LNG terminal could satisfy at least 30 percent of Poland's gas needs and make the Nord Stream gas less attractive.

The daily reports that the German government wasn't satisfied with the environmental impact analysis conducted by Gaz-System, Poland's state-owned gas grid operator, which green-lighted the terminal saying it doesn't have a cross-border impact.

The terminal would have a capacity of 5 billion cubic meters of gas per year, with shipments coming in from all over the world, including LNG giant Qatar.